Fifty-Seventh Report - AEA Technology Pension Case

Select Committee

Public Accounts Committee HC 1005 14 June 2023

Report Status Government responded

Conclusions & Recommendations 20 items (4 recs)

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Government Response (AI assessment · 20 of 20 classified)

Accepted 7

Acknowledged 1

Deferred 5

Rejected 7

Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Fifty-seventh report from Session 2022-23 · published 24 Sep 2023

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Recommendations & Conclusions

7 results

4 Recommendation Accepted

Write to set out support for informed pension financial decisions within three months.

Recommendation

This is another case of government not giving people enough time or support to make complex financial decisions. The government has a role to help people make good financial decisions, because of the detriment that bad choices can lead to. … Read more

Government Response Summary

The government agrees to write to the Committee detailing actions to support informed financial decisions regarding pensions. It cites specific initiatives already in place, such as the Stronger Nudge to Pensions Guidance and the national rollout of the mid-life MOT, and recent regulations made on 19 July 2023 for Pensions Dashboards.

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5 Conclusion Accepted

No less favourable" pension terms excluded government guarantee for AEAT scheme security.

Conclusion

When the Atomic Energy Authority Act 1995 was introduced to facilitate the privatisation of AEAT and outline the pension arrangements, it required that the pension benefits in the new AEAT scheme must be “no less favourable” than the previous scheme. … Read more

Government Response Summary

The government states that its 2013 Fair Deal policy means that similar circumstances would not occur again, as pensions in future privatisations would remain in public sector schemes.

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7 Recommendation Accepted

GAD's note significantly influenced AEAT members' pension transfer decisions, despite caveats.

Recommendation

GAD’s note suggested that scheme members seek independent financial advice if they were unsure of the most suitable course of action.10 We asked GAD whether it was realistic for scheme members to get independent financial advice, particularly when GAD is … Read more

Government Response Summary

The government agrees to support informed pension decisions by September 2023, committing to write to the Committee with specific actions and highlighting initiatives like the Stronger Nudge to Pensions Guidance and Pensions Dashboards.

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17 Conclusion Accepted

Government provided insufficient and misleading information with restrictive one-month deadline for AEAT pension decisions.

Conclusion

The AEAT case is one where government directly provided information intended to help pension scheme members decide what to do with their accrued pension benefits. Members were only given one month to make the decision, and consider that the information … Read more

Government Response Summary

The government agrees with the recommendation and will inform the Committee of actions taken to support informed pension decisions. They cite recent steps like the Stronger Nudge to Pensions Guidance, national mid-life MOT delivery, and new regulations for Pensions Dashboards.

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18 Conclusion Accepted

Government and regulators consistently fail to adequately support individuals making complex financial decisions.

Conclusion

This committee has previously found similar issues with how government provides or oversees support for people making complex or long-term financial decisions, including through the regulation of independent financial advice. Most recently, our inquiry last year into the British Steel … Read more

Government Response Summary

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19 Conclusion Accepted

Consumers and students lack adequate support to understand complex financial products and education choices.

Conclusion

This committee’s 2016 report on financial services mis-selling similarly concluded that the Financial Conduct Authority was not doing enough to ensure that consumers understand the financial products they are buying. The report found that even the most knowledgeable consumers can … Read more

Government Response Summary

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20 Conclusion Accepted

DWP initiatives for improving pension financial advice lack clear timelines for tangible improvements.

Conclusion

We asked DWP how government can ensure it gives clearer and more accessible financial advice in similar situations in future. DWP told us that changes to policy on privatisations and transfers of pensions meant that the specific circumstances affecting 33 … Read more We asked DWP how government can ensure it gives clearer and more accessible financial advice in similar situations in future. DWP told us that changes to policy on privatisations and transfers of pensions meant that the specific circumstances affecting 33 Qq 50–51; C&AG’s Report, paras 3.10–3.11 34 Qq 44, 51 35 Q 74 36 Q 66; C&AG’s Report: para 1.7 37 Q 55 38 Committee of Public Accounts, Investigation into the British Steel Pension Scheme, Fourteenth Report of Session 2022–23, HC 251, July 2022, paras 2, 5 39 Q 54; Committee of Public Accounts, Financial services mis-selling: regulation and redress, Forty-first Report of Session 2015–16, HC 847, May 2016, para 4 40 Committee of Public Accounts, The higher education market, Forty-fifth Report of Session 2017–19, HC 693, June 2018, para 2 AEA Technology Pension Case 13 AEAT pensioners would be unlikely to happen again. More generally, it told us it has worked with the Financial Conduct Authority and the Pensions Regulator to strengthen the protections around financial advice on pensions. DWP said that encouraging engagement with pensions is difficult, and government has been considering how best to nudge people to seek financial guidance or advice, such as through the introduction of a pensions dashboard. DWP wrote to us after our evidence session to explain the ways it is trying to support people to engage with their pensions. This includes new regulations that came into force in 2022 to ensure nobody can transfer their savings through pension freedoms without either receiving Pension Wise guidance or opting out of it. It also includes initiatives under development such as Pensions Dashboards and DWP’s recent call for evidence on the support and information people need when accessing their pensions. However, DWP did not indicate when these initiatives might come to fruition and lead to tangible improvements.41 41 DWP letter to Committee dated 4 April 2023 14 AEA Technology Pension Case Show less

Government Response Summary

The government agrees, committing to write to the Committee by September 2023 to outline actions for supporting informed pension decisions through advice, guidance, and reduced complexity, alongside ongoing initiatives like the Stronger Nudge and Pensions Dashboards.

HM Treasury

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